Investigating the Effect of Microcredit on Hardcore Poor Household Income in Peninsular Malaysia

Abstract

     This study employed a cross sectional design with stratified random sampling to examine how Amanah Ikhtiar Malaysia (AIM)’s microcredit program improved the income of hardcore poor households in Peninsular Malaysia. This study designed and tested a structural equation model to examine the underlying relationship between group-based microcredit programs and how they affect household income. It was evident that AIM’s microcredit program increased household income. Therefore, this program should focus on providing adequate training, flexible and diversified loan programs, and increasing outreach. Policies should also be reviewed and re-organized to increase the employment rate and to reduce repayment problems and the dropout rate.